Buildings Insurance – Motor Trade Premises
Need to insure the building you work from? Buildings Insurance may not be as simple as it it first appears.
Motor Trade Insurance, particularly a combined policy can easily accommodate buildings insurance.
The process of insuring the building is a simple one, however its where you start in the process of getting it right that determines a hassle free existence should it all go wrong.
Firstly lets understand a very important aspect
You do not insure the building itself but your financial interest in it! That’s the technical bit out of the way.
What does that mean?
You may have heard the saying “you can’t insure something” that is not yours.
That isn’t exactly true in the world of all insurance but in the case of buildings insurance we need to understand that you own the building (we will move onto where a landlord owns the building further on and where you insure it) but you do not actually insure the material item (the building) itself – just your financial interest in it.
One step at a time!
If you already are insuring the building, where did you get the “insured value” from?
A wild guess?
The price you paid for the property?
Your builder mate gave you a rough cost and you added a bit on.
Laugh you may do but we have heard them all, no doubt you have figured that’s its not as easy as any of these options might seem but believe us there are lots more where these came from.
Ok, so what do I do then?
There are a number of ways of obtaining the correct figure for buildings insurance.
If you have just purchased the building, perhaps with the business then you will no doubt have been given a figure to “reinstate” the building, this will have been calculated (usually) when the survey was carried out. This will be an important factor where a bank is involved. After-all they own it until you have paid for it so its in their interest to ensure that your (actually their) property is adequately insured.
This is ok if you have just purchased it, but lets say you already own it and are concerned about getting the buildings insurance right. If the business or the property has been recently surveyed, perhaps by the bank then a good place to start is with the surveyor who carried out the survey in the first place, they will have all the dimensions of the property and should be able to provide a reinstatement cost for you, give them a call and explain what you need.
Failing this, the phone book is going to provide you with many surveyors in your area. At Real Automotive we can arrange a surveyor for you if you require or you can go to the RICS website.
My Landlord owns the building, what do I do – I want to insure it!
The first question here is why, usually this is down to two reasons, firstly that you are not happy paying the landlords building insurance premium or that in your tenancy agreement it states that you have to obtain buildings insurance. No major issue on either of these as long as you get it right.
Lets take the first one – you will have to agree this with your landlord, you will need to obtain the correct sum insured which is obvious, what isn’t so obvious in these circumstances is that your landlord MUST make you responsible for insuring the building by agreement – amended tenancy agreement for instance.
Remember above, you don’t insure the material item, you insure your financial interest in the property, so if your landlord hasn’t legally made you responsible your financial interest is not there. This ultimately would mean that you have agreed to obtain buildings insurance but your landlord has not renewed his. Without the agreement you can possibly see the problem – no one is actually insuring the property.
If the tenancy agreement makes you responsible, then you insure the building as if it was yours.
In both cases its important that you disclose this to your insurance advisor, we would advise that always the interest of the landlord is noted on the policy.
So, i’ve got the figure, now what?
The figure you will have been provided with should be given to your insurer/broker, as long as its been carried out by a qualified person they will have included a percentage for debris removal, and any demolition that may have to take place.
Whats reinstatement mean on buildings insurance?
Reinstatement is exactly what it means, the costs to put the building back to its position before the loss. As above, as long as the reinstatement sum insured is correct you will have no under-insurance issues in the event of a loss.
And the consequences of getting it wrong are?
We have all heard the stories about people who have haven’t been paid out in full when they have had a claim, this is a typical example of under-insurance. Here is a very simple example of how it works.
You have insured the building of your business for £100,000, following a storm you find that your roof is severely damaged and needs to be replaced. On obtaining estimates you find that the repair costs to the roof are £5,000. You will possibly receive a visit from a loss adjuster who happily agrees that the repair is fine at £5,000 but there is a bit of a problem, you insured the building for £100,000 when in actual fact it should have been insured for £200,000. (Don’t forget this is a very simple example) This means you are under-insured to the tune of £100,000.
The claim will be paid, but not in full! The reinstatement of the property remember is £200,000, insured for £100,000 which means the insurer will only pay 50% of the claim less any excess, in this case £2,500 less your excess. This is called the Average Clause or Average Condition which can be found in your policy. This is a very simple explanation, it is somewhat more complicated than this as insurers will give a % deviation to allow for some inaccuracy but this may only be 15% or similar depending on which insurer it is.
Really, the point of all this is GET IT RIGHT FROM THE START,
Basing your buildings insurance on a figure you would like to pay premium for, rather than what you need to pay will not pay off in the long term…
GET IT RIGHT!
Looking for Building Insurance
Let us look at your requirements for this type of cover, being specialist Motor Trade Insurance brokers we have instant access to all the motor trade insurance markets, we provide fast and competitive quotes tailored to what you need.
We can easily build in (excuse the pun) buildings insurance into the overall cover.
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